Canada: Supreme Court Of Canada Affirms Vicarious Liability Of Leasing Companies In Motor Vehicle Accidents Involving Leased Vehicle With Option To Purchase

Last Updated: December 11 2007
Article by BLG's Tort & Insurance Law Group

Most Read Contributor in Canada, September 2016

The Supreme Court of Canada has confirmed that under British Columbia law finance companies may be vicariously liable for motor vehicle accidents when they finance a consumer’s acquisition of a motor vehicle through a lease with an option to purchase instead of a contract of conditional sale Transportaction Lease Systems Inc. v. Jennifer Yeung, 2007 SCC 45.


Yeung arose out of a trial judge’s dismissal of the plaintiff’s action against, among others, a leasing company. The plaintiff was injured in a motor vehicle accident caused by a youth driving a vehicle owned by his father. The father had leased the vehicle from the leasing company. Under the lease, the title to and a security interest in the vehicle was to remain in the lessor, and the father had two options to purchase the vehicle. If the father did not exercise either option, the leasing company was entitled to sell the vehicle. The leasing company’s liability turned on the proper interpretation of section 86 the Motor Vehicle Act, R.S.B.C. 1996, c. 318 (the "Act"). Section 86 of the Act provides, in pertinent part:

Responsibility of owner or lessee in certain cases


In an action to recover loss or damage sustained by a person by reason of a motor vehicle on a highway, every person driving or operating the motor vehicle who is living with and as a member of the family of the owner of the motor vehicle, and every person driving or operating the motor vehicle who acquired possession of it with the consent, express or implied, of the owner of the motor vehicle, is deemed to be the agent or servant of that owner and employed as such, and is deemed to be driving and operating the motor vehicle in the course of his or her employment.


If a motor vehicle has been sold, and is in possession of the purchaser under a contract of conditional sale by which the title to the motor vehicle remains in the seller until the purchaser becomes the owner on full compliance with the contract, the purchaser is deemed an owner within the meaning of this section, but the seller or the seller's assignee is not deemed to be an owner within the meaning of this section.

British Columbia appellate authorities had established that leasing companies were not vicariously liable under section 86 in circumstances such as those in Yeung. Accordingly, the trial judge dismissed the plaintiff’s action as against the leasing company.


The plaintiff appealed. The primary issue on appeal remained the proper interpretation of section 86 and, specifically, whether the leasing company fell within the exemption to vicarious liability in subsection 86(3). A five-member panel of the Court of Appeal for British Columbia unanimously allowed the plaintiff’s appeal and, in so doing, reversed existing appellate authorities on the scope of leasing companies’ vicarious liability. Consistent with established principles of statutory interpretation, courts interpreting statutory exemptions and exceptions must not undermine the broad purposes of the legislation. The purpose of section 86 of the Act is to extend liability to the owner of a vehicle except in two specified situations: (1) the motor vehicle "has been sold"; and (2) the vehicle is in the possession of the purchaser under a contract of conditional sale by which title to the vehicle remains in the seller until the purchaser becomes the owner on compliance with the contract. The legislature appears to have intended to extend the exemption in subsection 86(3) only to persons who had "sold" the vehicle and who had therefore parted not only with possession and control, but also effectively with title, or ownership, of the vehicle. The exemption in subsection 86(3) thus does not extend to a lessor who grants an option that might never be exercised as such a lessor remains an "owner" long after the term of the lease expires. The exemption in subsection 86(3) applies only where a motor vehicle has been "sold" pursuant to a true conditional sale agreement.

The Court of Appeal’s reasons for judgment are available on the web at


A unanimous Supreme Court of Canada (per McLachlin C.J.C.) dismissed the leasing company’s appeal. In brief oral reasons, the Supreme Court of Canada found the meaning of section 86 of the Act to be plain and for that reason agreed with the conclusions of the Court of Appeal for British Columbia. Consequently, as a result of Yeung, the exposure of leasing companies for vicarious liability in motor vehicle actions has been has been significantly enlarged.

The Court’s reasons for judgment are available on the web at


The British Columbia Legislature responded to the Court of Appeal’s decision in Yeung by adding several provisions relating to leased vehicles to the Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231.

Perhaps most notably, although the Legislature has maintained the vicarious liability of lessors under section 86 of the Act, it has placed limits on the liability of lessors imposed by operation of section 86. Under section 82.1 of the Insurance (Vehicle) Act (not yet in force), the maximum recoverable from a lessor of a motor vehicle in an action for loss or damage arising out of the use or operation of a motor vehicle on a highway in British Columbia in respect of one incident is the greater of: (a) $1,000,000; (b) the amount prescribed by regulation; or (c) the amount of third party liability insurance required by law to be carried in respect of the motor vehicle. The limit on lessor liability does not, however, apply to amounts payable by a lessor other than by reason of vicarious liability imposed under section 86 of the Act. Finally, the limit applies only to loss or damage sustained on or after section 82.1 comes into force.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.